Safestay Share Discussion Threads

[bookbroker] 25/9/2019 09:25

Used to like this company, but seems to have high level of admins strive expenses, which you’d expect in a hostelry, and the finance costs have shot up alongside. Unless they can can raise bed rates, increase sundry income(snacks and drinks), this is a pure property play. Alongside that many cities introducing tourist taxes in the hope of ensuring infrastructure can cope, will this affect visitor numbers, A tricky one to figure as business model fairly simple!

[muffster] 25/9/2019 08:55

Just read up on this, looks compelling but when do people expect the next dilution to come, when they need to hit the targeted fund raising to get to a self sustaining 20 hotels?

[parsons4] 25/9/2019 08:36

Just increased my holding these are well undervalued IMHO. Also seem to be off the radar which is probably why they are so cheap. Let's face it an EBITDA of £3.8m on say a 15 PE equates to a value of £57m over 2 times the current value

[montynj] 25/9/2019 08:12

Very good results

[croasdalelfc] 23/9/2019 19:51

Results tomorrow

[hybrasil] 18/9/2019 19:30

Is Hostelworld not just a booking engine ?
I don’t think they own any properties

[angel333] 18/9/2019 17:59

Interims have to be delivered to the market no later than Monday 30th September so they are close.....

[shandypants2] 18/9/2019 14:45

Hi, I like this company and think it has a simple, sensible strategy.

In responding to some of your questions.

Competition - main one is probably Hostelworld. Similar prices etc and do offer private rooms in most locations but don't always have ensuite etc.

Occupancy - agree would expect 80% plus. Have improved website and supposedly traffic is increasing so hopefully so will sales.

£10m admin - not sure what this includes, assume both local and central staff are rolled into this, but not split out. Would be good to see staff costs broken down to get a better understanding. But revenue is £14m so well above this and company is making an operating profit and a healthy EBITDA so is generating cash.

Yes £40m debts (loan and leases) but £70m assets so net assets are greater than value of company! I'm happy with this.

Todays RNS re Glasgow purchase is a positive - company is expanding as they said they would and location seems logical (also £ weak atm so not purchasing in Europe is probably sensible).

Would be good to get some 1/2 year financials/trading statement but think this will be in profit soon, if not already!

[cyberbub] 01/9/2019 23:29

Just looking in here after a tip from Justin Waite.The company seems to have plenty of beds in good locations, a high gross margin, and directors experienced in the industry. Revenues are growing rapidly.BUT* Still not profitable due to ludicrous £10M central admin costs for a company this size. WTF?!* £30m in debt, roughly 150% of market cap which is just about OK but could rise into the risky zone with more acquisitions.* Still got cash from the big placing 9 months ago, but a lot has gone on acquisitions. Much of the revenue growth is frrom acquisitions not organic.* Occupancy is decent at 76% but really this sort of accommodation in these huge footfall areas needs to be at 80-85% IMO to really get operational leverage.* They could raise prices by 5-10% which would make a big difference but perhaps they can't due to heavy competition. What is their USP compared to other hostels??Just some thoughts, any insights?Thanks.NAI etc

[bookbroker] 23/8/2019 13:35

I liked this company, but although business model very straightforward the rest seems opaque, the buy and build model and exploit the economies of scale good in practice. However the market seems happy to keep its rating very low, Lipman runs the show, but is he building a business on leverage, the room rates need to rise but the dormitory format will resist that, and it’s all about squeezing cash out the customers like Ryanair does on sundries. Seems very simple so why the poor performance. Threat of tourist taxes in places Barcelona, limited ability to increase returns from UK hostels, so WHAT is the real issue?

[philipc240] 23/8/2019 12:32

Good point about the sinking pound but looking at it other way. Was fundraise in GBP? If so buying hostels in EU will have increased as sterling goes down because of Brexit.

[lukehold] 23/8/2019 07:41

Very low volume recently

[philipc240] 22/8/2019 20:21

That's my understanding Luke pending they've continued to sell at volumes when it was 40p ...so could be a bit longer. Looking very cheap at moment, anyone know about their debt and how that's structured? Been researching (light research so please correct if mistaken) before hoping to dip in hadn't appreciated they they had 18m debt on books, with expansion happening even with last fundraise they'd be looking to raise again even when cash flow positive - if they expecting to stick to hostel count expansion?

[varies] 09/8/2019 18:53

Surely the sinking pound is more of a benefit than a burden.
Travellers from the UK to the continent still need to sleep somewhere and many who could have afforded a cheap hotel will be coming to Safestay's hostels instead.
A higher occupancy rate would obviously be very beneficial and Euro profits worth more in Sterling. Most of our customers are presumably young people who want to enjoy foreign travel before they get encumbered with jobs and small children and will not be easily deterred by currency movements.
Camping is cheaper still but there are limited facilities for doing so in Madrid or Barcelona.
Hostels in the UK will be little affected.
As for Miton, does anyone know any reason why they should want to reduce their holding further ?

[lukehold] 08/8/2019 22:18

Is that right if Miton can only shift around 50k per day is going to take 3 months to shift so end of September?

[richardjohn10] 08/8/2019 09:20

True, that and MitonAn update on acquisition will still see this rerate. Business is looking great.

[croasdalelfc] 08/8/2019 09:16

£ sinking doesn't help

[richardjohn10] 07/8/2019 12:35

Just waiting for new acquisition and this should bounce nicely.

[richardjohn10] 05/8/2019 08:23

Way undervalued.

[croasdalelfc] 05/8/2019 08:10

EasyHotel bought out for EV of £126m .SSTY own more hotels and have similar number of beds -

[richardjohn10] 31/7/2019 09:47

Buys shown as sells again

[alloa2003] 31/7/2019 00:20

You could argue that people will always travel, some may look at this type of accommodation if their budget might not stretch. It could go either way.

[alloa2003] 30/7/2019 17:46

Why dont they offer paid trips (buses) from one hostel to another for those looking to travel to a number of countries? Additional revenue and ensures customers stay with them. Just an idea.